H&P Announces First Quarter Earnings and More Rig Construction
Helmerich & Payne, Inc. reported record net income of $50,814,000 ($0.96 per diluted share) from operating revenues of $255,388,000 for its first fiscal quarter ended December 31, 2005, compared with net income of $39,310,000 ($0.77 per diluted share) from operating revenues of $174,679,000 during last year's first fiscal quarter ended December 31, 2004.
Included in this year's first quarter net income are gains from the sale of portfolio securities of $1,721,000 ($0.03 per diluted share). Last year's first quarter net income included $16,060,000 of gains from the sale of portfolio securities and $5,500,000 net income from the sale of two drilling rigs, or a total of $21,560,000 ($0.42 per diluted share).
Income from the Company's U.S. land rig operations continued to rise significantly, with cash margins per rig day increasing by 18% over the previous quarter. Pre-tax operating income for this year's first quarter in the U.S. land rig operations was $70,991,000, compared with $25,588,000 for last year's first quarter, and $56,028,000 for last year's fourth quarter. Average revenue per rig day rose to $20,198 and cash margins per rig day to $11,019 for this year's first quarter, compared with $13,363 revenue per rig day and $5,563 cash margin per rig day for the first quarter of last year. During the fourth quarter of fiscal 2005, average rig revenue per day was $18,563 and average rig margin per day was $9,317. Average U.S. land rig utilization during the first quarter of FY 2006 was 97%, compared with 92% during last year's first quarter, and 95% during last year's fourth quarter.
U.S. offshore platform operating income increased to $5,111,000, compared with $4,168,000 for last year's first quarter, and $4,720,000 for last year's fourth fiscal quarter. Although active during the fourth quarter of 2005, three rigs that were at various stages of mobilization during that quarter began regular drilling operations at higher revenue and margins per day during the first quarter of fiscal 2006. The more profitable activity helped offset the loss of activity and income of Rig 201 which was damaged by Hurricane Katrina. Utilization for the first quarter of fiscal year 2006 was 64%, compared with 56% during last year's first quarter, and 65% for last year's fourth quarter.
International operating income rose to $9,302,000 for the first quarter of 2006, compared with $6,197,000 for the first quarter of fiscal year 2005, and $3,910,000 during the fourth quarter of fiscal 2005. Most of the sequential improvement in operating income is a result of improved profitability in Ecuador and Venezuela during the first quarter, and lower fourth quarter income resulting from a $1.9 million non-recurring accounting adjustment. Utilization for the first quarter of fiscal year 2006 was 83%, compared with 71% during last year's first quarter, and 85% for last year's fourth quarter.
The first quarter of fiscal 2006 is the first period that the Company is required, according to FAS 123®, to include stock-based compensation expense in its financial statements. As a result, general and administrative expense for the first quarter included $2.7 million of pre-tax stock-based compensation expense. Pre-tax stock-based compensation expense for the second, third, and fourth quarters of 2006 is expected to total approximately $3.9 million, $1.6 million, and $1.6 million, respectively. The first two quarters of fiscal 2006 include expense amortization acceleration brought about by the previously announced retirement of a Company executive on March 1, 2006.
The Company also announced that the number of customer commitments for the construction of additional FlexRigs® continues to increase. A total of 14 exploration and production companies have now committed to 54 new FlexRigs. These include ten new FlexRig3s and 44 new FlexRig4s, all of which will be built as a result of contracts executed with durations of at least three years. The total investment required for the construction of the 54 new rigs is estimated at $609 million. The first of the 54 new rigs commenced operations earlier this month in western Colorado. Approximately 30 new FlexRigs are expected to be completed by September 30, 2006, the end of the Company's fiscal year. At that time, the Company expects to be delivering new FlexRigs at the rate of four per month.
Company President and C.E.O., Hans Helmerich commented, "The Company experienced solid increases in operating income across the board in its three business segments. We are very upbeat about Helmerich & Payne's position in this strong up cycle. Including the newest FlexRig4 that recently commenced operations in Colorado, the 54 announced new builds will provide a 42% increase in total units to our entire drilling fleet over the next 18 months. Market leadership in new build technology and the resulting orders for new rigs provide exciting shareholder growth prospects and outstanding investment returns with attractive, fixed contract terms."
Helmerich & Payne, Inc. is a contract drilling company that owns 91 U.S.
land rigs, 11 U.S. platform rigs located in the Gulf of Mexico, and 27
international rigs, for a total of 129 rigs. Included in the total fleet of
129 rigs are 51 H&P-designed and operated FlexRigs.
Manages 11 Offshore Rigs
- Walking Oil Rigs Spur Cheaper, Quicker Drilling in Supply Glut (Sep 01)
- Helmerich & Payne May Cut 2,000 Jobs As It Idles Rigs (Jan 29)
- Helmerich & Payne Welcomes New Board Member (Jun 12)